Survey: Budgeting has pushed up litigation costs

Costs budgeting has increased the costs of litigation, according to 80% of solicitors who responded to a survey carried out by the London Solicitors Litigation Association (LSLA), in conjunction with the New Law Journal.

The expense of litigation has also been increased by rising court fees and disclosure costs, the poll of 142 lawyers found, with 82% expecting the cost of litigation overall to grow over the next five years.

Increased court fees were said by 65% of respondents to have already affected clients’ decisions about whether or not to begin proceedings, and 87% predicted they would affect future decision-making. The impact was being felt by businesses of all sizes, with the front-loading of fees proportionate to the value of the case in dispute being unaffordable for smaller businesses and troubling to big business.

Views were evenly split on the effectiveness of the current approach to e-disclosure. The LSLA said it was clear, however, that there was much further to go in achieving a level of co-operation between litigating parties and with the courts to ensure the scope and cost of disclosure was kept at sensible, practical levels.

LSLA president Ed Crosse said: “Front-loading of the increased court fees has delivered a heavy blow to commercial litigation, especially to smaller businesses which now feel deterred from pursuing legitimate claims. It’s also leading to more shopping around by larger businesses who are baulking at the increasing cost of litigating here. It would have been fairer to have sought to generate this increased income during different phases of the litigation, thus better aligning fees with the status of the case.

“There are positives to come out of our survey too with summary assessment of costs by trial judges seen as welcome, subject to a proper examination of its relationship with budgeting. The recent Pyrrho Investments ruling around the use of predictive coding in e-disclosure is also seen as a progressive move.”

Meanwhile, in a report this week that was critical of many of the increases the Ministry of Justice has made to fees in courts and tribunals – with employment tribunals a particular area of concern – the justice select committee said that, in relation to money claims, it would be “unsatisfactory” if the government were to double the current cap to £20,000 without analysing the impact of what has already taken place.

The fee is 5% of the value of the claim up to a cap of £10,000. The committee added: “We recommend that the government review the impact of the April 2015 increase in fees for money claims on the international competitiveness of London as a litigation centre when sufficient time has elapsed, possibly two or three years, to enable that impact to be assessed.

“The government should not resurrect its proposal to double the £10,000 cap, or remove it altogether, unless such a review has been undertaken.”

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Costs News
Published date
22 Aug 2016

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